Extracts of the Summary of Key Findings of the Annual Report of the Auditor General For the Year Ended 30th June 2015

Transcription

1 Extracts of the Summary of Key Findings of the Annual Report of the Auditor General For the Year Ended 30th June 2015 Issued by the Auditor General Office of the Auditor General Audit House Plot 2C Apollo Kagwa Road, P. O. Box 7083, Kampala, Tel, Fax, Web:

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3 MESSAGE OF THE AUDITOR GENERAL TO THE PUBLIC ON RELEASE OF THE AUDITOR GENERAL S REPORT FOR THE FINANCIAL YEAR ENDED 30 TH JUNE 2015 I m pleased to present the Auditor General s report for the financial year ended 30th June 2015 I am required under article 163(3) of the constitution of the republic of Uganda to audit and report on the public accounts of Uganda and all of public offices including The Courts, The Central and Local Government Administrations, Universities and Public Institution of like Nature and any public corporations or other bodies established by an act of parliament. Under the article 163 (4) of the constitution am also required to submit to parliament annually report audited by me for the year immediately preceding and avail copies as required in part III of the national audit act,2008. During the year, I audited 109 Ministries, Departments and Agencies (MDAS), 83 Statutory Corporations, 119 Projects, 35 Forensic investigations, 4 IT audits, 878 local governments, 277 secondary schools and tertiary institutions,13 referral hospitals, 11 value for money audits and 4 specialized (engineering) audit, I hereby present extracts of some key findings of the report that need redress. John F.S. Muwanga AUDITOR GENERAL 31 ST December 2015 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 3

4 VISION: To be an efficient and effective Supreme Audit Institution in promoting Public Accountability MISSION: To audit and report to Parliament and thereby make an effective contribution to improving public accountability and value for money spent CORE VALUES: Intergrity, Objectivity and Professional Competence 4 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

5 TABLE OF CONTENTS MESSAGE OF THE AUDITOR GENERAL CENTRAL GOVERNMENT STATUTORY CORPORATIONS LOCAL GOGERNMENT VALUE FOR MONEY AUDITS an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 5

6 1.0 CENTRAL GOVERNMENT Government has undertaken various Public Finance Management (PFM) reforms which have led to improvements in public financial management notably the management of the payroll and the Treasury Single Account among others. However, Government continues to have challenges which require attention. The key findings below indicate selected areas of concern which require Government intervention. 1.1 NUGATORY EXPENDITURE Government paid UGX.26.1bn during the period under review as delayed settlements of obligations arising from contracts for construction services, Court awards, and contributions to international organizations etc. This expenditure is considered wasteful as the expenditure could have been avoided had these been settled in time. I noted that the payments are to continue in the near future as a number of the obligations have not been fully settled and there are no concrete plans to clear these obligations. There is a need to have a central database where Accounting Officers submit the status of these obligations for better planning in terms of prioritizing settlement and monitoring the causes of avoidable expenditure. 1.2 UNSUSTAINABLE PENSION LIABILITY The Ministry of Public Service recorded an outstanding pension and gratuity liability of UGX.199,255,907,539 as at 30/6/2015 (up from UGX.108,681,159,047 as at 30/6/2014). It was noted that the gratuity and pension arrears continue to accumulate uncontrollably, a fact which the Accounting Officer has attributed to inadequate budgetary provisions over the years. I noted that the Ministry of Public Service does not have a comprehensive stock of past employees as well as a forecast of how the current Government employees will retire and therefore plan for their terminal benefits accordingly. It only relies on claims submitted by the retired staff or by their benefactors, in case of death of the retired employees. I have accordingly advised the Accounting Officer to devise a comprehensive strategy for the management of gratuity and pension for the entire public service. 1.3 IRREGULAR PAYMENTS TO PENSIONERS I noted that UGX.11bn was paid to pensioners who had exceeded their pensionable period of 15 years, yet no life certificates were availed as proof of their continued existence. Absence of evidence of continued existence of pensioners in form of life certificates to support pension payments implies payments to non-existent pensioners could arise. 6 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

7 In addition, I observed multiple payments amounting to UGX.1,161,382,909 to various pensioners. I noted that monthly pension payments were made to accounts of pensioners who had already received their monthly remittances for the particular months. The above two scenarios present a risk of falsification of pension data/files as well as double payment of a particular category of pensioners. I advised the Accounting Officer to institute an investigation into this matter and if confirmed, recovery measures of the amounts irregularly paid out should be initiated. 1.5 OUTSTANDING COURT AWARDS AND COMPENSATIONS AND OTHER LIABILITIES - UGX bn It was noted that the outstanding amount in Court awards, compensations and other liabilities had accumulated to UGX.479.3bn by 30th June The bulk of this figure comprised of unsettled court awards and compensations which amounted to UGX 477.7bn, while the other liabilities amounted to UGX.1.52bn. The liabilities figure has been accumulating over the last four financial years. The delayed payments led to penalties in interest and other related charges. There is need for deliberate action to settle this amount by Government. 1.4 ESCALATING CONTINGENT LIABILITIES FOR COURT AWARDS AND COMPENSATIONS UGX.4,330,041,624,839 was recorded as contingent liabilities in court cases against Government as at 30th June The contingencies increased by UGX.34,737,542,214 from last year s position of UGX.4,295,304,082,625. Given their magnitude, the contingency liabilities create additional burden on public resources. As indicated in my previous report, there is need for Government to examine the issue further, with a view of establishing the likely causes to facilitate Government to arrive at a sustainable solution. 1.6 OUTSTANDING INTERNATIONAL OBLIGATIONS I noted that a number of Government entities are indebted to International Organizations such as PTA Bank, ADB, EADB, WTO, UNIDO, COMESA and Shelter Afrique. A sample of five entities revealed indebtedness of UGX.77,724,089,603, US$.4,968,950. Unpaid annual subscriptions limit participation of the country in international activities. For the sample of the affected organizations, this has led to denial of benefits accruing from the organizations, withdrawal of shareholding, interest charges for delayed payments and suspension of membership. This was attributed to underfunding on this budget line. an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 7

8 I advised the Ministry of Finance, Planning and Economic Development to prioritizes this area to ensure effective Government participation in International organization activities. 1.7 INADEQUATE PLANNING FOR THE EXCESS ELECTRICITY GENERATION Over the years Government has invested a lot of funds in expansion of electricity generation capacity, which has grown by 8.45% since 2009/10, with the current generation estimated at approximately 685 MW. I however noted that this capacity has not yet been matched by the anticipated demand. Current peak demand is approximately 550MW creating a current excess capacity of 135MW. This challenge has been mainly attributed to low demand and limited distribution and transmission networks. In addition, some power plants are not generating electricity at full capacity, yet this idle capacity (also known as deemed energy) is paid for through tariffs and Government subsidies. For the last two years, Government has on average paid UGX.11.57bn annually for deemed energy purchases. I also further noted that for the two thermal plants, Government continues to pay capacity charges amounting to approximately UGX.68bn annually, through UETCL, yet they are not contributing any power to the grid. Committing Government into investment projects without adequate analysis of demand limitations may lead to Government failure to pay off the loans (through the tariff) hence the possibility of increase in subsidies further draining the Government meagre resource. In light of the new anticipated investments in the cheaper hydroelectric power, Government could review the licensing policy of costly thermal plants and revert to them only when there is enough demand to accommodate the produced energy. 1.8 PROCUREMENT OF CONTRACTORS FOR ISIMBA AND KARUMA PROJECTS Government of Uganda is undertaking the construction of two mega hydro power projects; Karuma Hydro Power Dam (600MW) and Isimba HPP (183.2 MW) at a cost of USD.1.65bn and USD.570m respectively. I noted that both Engineering, Procurement and Construction (EPC) contracts were directly procured contrary to provisions of the PPDA Act, 2003 which require international bidding for such contracts. In the circumstances the fairness of the cost and quality of the works may not be guaranteed. Government needs to ensure transparent procurement processes are followed in order to avoid possible costly and substandard projects. 8 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

9 1.9 UNDERSTOCKING OF THE GOVERNMENT PETROLEUM STRATEGIC RESERVES In 2012, the Government of Uganda and a private petroleum company entered into a concessional agreement to refurbish, restock, maintain and manage the petroleum strategic reserve facility at Jinja. Despite the concession requiring the operator to ensure that 40% (12million litres) of the storage capacity of the products is available at all times, I noted during inspection in September 2015, there was only 274,000 litres of petrol and 331,000 litres of diesel in stock compared to the required stock levels of 20,000,000 and 10,000,000 litres respectively. My assessment is that the stock build up is not being achieved and consequently the national petroleum reserves are not serving the purpose for which they were established. I advised that the matter be taken up with the operator to improve on the strategic reserves as envisaged CONSTRUCTION OF KAMPALA- ENTEBBE EXPRESSWAY In order to establish the fairness of the project costs, a comparison of the costs of Kampala-Entebbe Expressway with a similar project also constructed by the same contractor from 2010 to 2014 was undertaken. An analysis was done and adjustments for the different features of the two expressways were made. It was observed that the unit cost for the Kampala-Entebbe expressway was US$ million per lane kilometre while the similar expressway is US$ million per lane kilometre. Furthermore, a cost comparison was made using experience in the East African region where costs for constructing a 2 lane highway with similar pavement structure range between US$.800,000 to US$.900,000 per km. Adjustments to this figure to take into account the four lanes and other infrastructure would amount to US$ million per km. This is less than half of the cost of Kampala-Entebbe Expressway which is US$ million per Km. The project costs could have been much lower if UNRA had procured the contractor through competitive bidding DUPLICATION OF CONSULTANCY SERVICES FOR KAMPALA-ENTEBBE EXPRESSWAY The supervision for Kampala-Entebbe Expressway was awarded to a private firm which was also referred to as the employer s representative on site. However, another international firm in association with local consulting engineers was assigned by UNRA to provide Project Management services in July The reasons for engaging the international firm to provide Project Management Services was said to be The Procuring and Disposing Entity an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 9

10 has insufficient capacity to provide fulltime Project Management Services under the Kampala Entebbe Highway Project as the project is complex and requires regular presence of Employer s representative on site. However, a review of the services provided by the consultant s revealed duplication of activities as the originally recruited private firm serves the same purpose as the international firm. There is need to review the international firm s contract and take action that will address the shortfall and save unnecessary costs MISMANAGEMENT OF FUNDS UNDER THE MINISTRY OF LOCAL GOVERNMENT (MOLG) There was mismanagement of funds noted at the Ministry of Local Government. Out of UGX.30,557,016,181 released; UGX.12,086,792,676 (40%) was spent on activities that had not been budgeted for under such line items. Notably, UGX.5,525,974,783 released for procurement of vehicles for the districts were diverted to fund allowances and other operational activities. There was no authority obtained from the Permanent Secretary/Secretary to the Treasury for reallocation of funds contrary to section 22 of the PFMA Further review of the diverted funds revealed that UGX.3,827,011,454 remained unaccounted for and UGX.635,621,910 was questioned due to inappropriate accountabilities. This matter was brought to the attention of the IGG and it is currently under investigation. There is need for Government to enhance internal controls and closely monitor and supervise implementation of Government programmes DELAYED CONTRACTS It was observed that a number of Government contracts/projects totalling to UGX.87.5bn that had been on-going or started during the financial year lagged behind schedule or demonstrated signs of failure. It was also noted that a number of these contracts/projects had exceeded their completion dates while others had been abandoned. These delays ranged between two months to six years. The delays in contract execution were attributed to insufficient funding and inadequate supervision of contract implementation by the responsible entities. In the absence of a mitigation measures, it may result into further losses to Government and failure to achieve the intended objectives of the procurements/ contracts. There is need for closer supervision of these projects to ensure timely service delivery. 10 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

11 1.0 UNSUSTAINABLE PAYMENT OF MANDAMUS Government payments made under mandamus orders increased from UGX.88 billion in the previous year to UGX.114 billion in 2014/2015 being an increment of 30%. These increasing unplanned payments may not be sustainable without impacting on other Government programmes. I advised Government to explore strategies that would reduce mandamus payments CASE BACKLOGS I noted in the previous audit report, the Judicial Service Commission has been slow in handling cases brought against judicial officers. At the closure of the previous year the figure for case backlog stood at 749. According to the Commission s annual report, 2014/2015, during the year under review, the Commission registered 137 cases, bringing the total number of cases to 886 of which only 106 cases were cleared. The un-cleared cases at the closure of the year stood at 780. The Accounting Officer attributed this to the operations of the Commission which involves non-permanent commissioners and as such regular sittings for case settlement are not possible. It was further noted that the Commission has no formulated policy on prioritizing the cases to be handled. In the circumstance, some cases have remained unattended to over the years ACCUMULATION OF LABOUR DISPUTES AT THE INDUSTRIAL COURT The Industrial court was established under the Labour Disputes (Arbitration and Settlement) Act, 2006 to arbitrate labour disputes, adjudicate questions of law arising from references to it by any other law and to dispose of the labour disputes without undue delay. However, the cases before the court by the end of October 2015 had accumulated to; 322 claims, 273 references, 26 appeals, 23 mediations and 36 miscellaneous applications. The accumulation of the cases was attributed to understaffing and underfunding of the Court. Delays in adjudication of labour disputes may result into industrial unrest. MoGLSD should liaise with MoPS and PSC to have the staffing gaps resolved LAND MATTERS I noted that Uganda Land Commission (ULC) had land management issues that included irregular land leases, lack of an up dated land register, insufficient data on land leases, failure to establish unsurveyed land, un-titled land, land with unknown current usage, among others. This was partly attributed to lack of a law spelling out the mandate of ULC in regard to lease and managing Government land. Notably was the 99 year lease for a flower company for land measuring 360ha which contained irregularities in the process of award. Although, this lease was cancelled an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 11

12 the flower company has taken the matter to courts of law. There is need for Government to streamline the operations of the Uganda Land Commission with a view to improving custody and allocation of Government land through enactment of a law clearly spelling out the roles of parties concerned LACK OF FOLLOW-UP ON BILATERAL AGREEMENTS/ PROTOCOLS The protocol agreement between Government of Uganda (GoU) and Democratic People s Republic of China (DPRC) was signed on the 27th June It involved establishment of a demonstration centre under the National Agricultural Organisation. However, it was observed that after hand-over of the site by Ministry of Agriculture, Animal Industry and Fisheries to the DPRC, there was no proper follow up by Government on the project as such it was difficult to establish whether the anticipated funding of RMB YUAN 50,000,000 equivalent to UGX.26 bn was received and how it was applied to the project. Further, Government as part of the protocol provisions was required to prepare operational guidelines and contracts to enable proper implementation of the project but this was not done. My inspection revealed that this project had been completed but there has been no hand-over. There is need for vigilance on the part of Accounting Officer to closely monitor such projects so that value for money is obtained FIXED BUDGET ALLOCATION FOR ESSENTIAL MEDICINES AND HEALTH SUPPLIES I noted that the annual budget allocation of UGX.218bn for essential medicines and health supplies to all health facilities across the country has remained constant since 2011/2012 despite the remarkable increase in the number of patients. For example in Mulago National Referral Hospital the number of patients has increased from 1,356,870 in 2011/2012 to 1,641,390 in 2014/15. Similarly, in China Uganda Friendship Hospital Naguru the number of patients increased from 360,951 in 2012/2013 to 704,947 in 2014/2015. As a result, the health facilities continuously experienced shortages of drugs which affect service delivery. I advised the respective hospital Accounting Officers to liaise with the Ministries of Health and Finance to ensure that the funding for essential medicines matches the increase in the number of patients as a way of providing minimum health care. 12 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

13 1.20 BUDGETING FOR WORKMAN S COMPENSATION Section 18 of the Worker s Compensation Act 2000 requires every employer to insure and keep workers insured in respect of any liability which workers may incur. Section 2 of the same Act provides that insurance shall apply to all employment within Uganda except for active members of the armed forces in Uganda. The current practice regarding workers compensation is that both the responsible Permanent Secretary (MOGLSD) and Commissioner Labour have been responsible for compensation matters. Individual Ministries have not been budgeting for workers compensation. As a result, I noted that compensation of Government workers amounting to UGX.3.2bn had not been settled. In the circumstances, the entitled persons were denied their rightful claims and this may result into litigation. I advised that the Permanent Secretary, Ministry of Gender, Labour and Social Development to liaises with the Ministry of Finance, Planning and Economic Development to devise means of securing adequate resources for the workers compensation REGIONAL COORDINATION AND MONITORING FRAMEWORK FOR NORTHERN CORRIDOR INTEGRATION PROJECTS Government signed fourteen (14) protocols under the Northern Corridor Integration Projects where substantial amounts of funds have been invested and implementation is on-going. For example amounts totalling to UGX4.2bn was disbursed to fund the power interconnection and the Hoima-Lokichar- Lamu oil pipeline. However, the protocols do not provide for regional coordination and monitoring as well as the audit framework to provide an independent assurance on the utilization of joint funds. This renders it difficult to track the progress of the projects and follow up the accountability for the funds disbursed NON ALIGNMENT OF MISSION CHARTERS WITH BUDGETS A mission charter outlines the key result areas for each of the missions abroad, designed to guide activities aimed at achieving the objectives of the national foreign policy. I observed that although the Ministry of Foreign Affairs issued charters to the missions abroad, they were not aligned to the annual mission budgets, in various cases the expected outputs were not quantified, quarterly reports not prepared and charters are not time bound. an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 13

14 In addition, budgets are inadequate and are mostly applied to fixed costs such as Foreign Service allowances, wages and salaries, rent and utilities. In the circumstances, the charters do not adequately serve the intended purpose as the assessment of their implementation is difficult. I advised the Ministries responsible for foreign affairs, finance and individual missions; to closely liaise, align budgets, and release funds to finance charter activities. Clear annual outputs should also be defined, and prescribed regular reporting be enforced LACK OF AN INVESTMENT POLICY AND A LEGAL INSTRUMENT GUIDING GOVERNMENT LONG-TERM INVESTMENTS Government does not have an investment policy to clearly guide the processes of identification and evaluation of possible investment projects. This exposes Government to a risk of entering into less profitable investments which may result into losses. The lack of an investment policy may lead to non-alignment of Government investment priorities with the National Development Plan. I further noted that there is no legal instrument in place which authorizes the Government to make long term investments. The Public Finance and Accountability Act, 2003, only provided for investments with a bank at call or subject to notice not exceeding twelve months. I advised Government to establish a clear investment policy to guide and direct the Government investments in the areas identified in the NDP, in addition to compilation of an enabling law to guide all its long term investments COMPENSATIONS OF PROJECT AFFECTED PERSO Review of the compensations for the Project Affected Persons (PAPs) on the two projects of Mukono-Kyetume-Katosi road and LPC Busega revealed inconsistencies in the names of the PAPs appearing in the Chief Government Valuers report and those compensated. The land and properties surveyed did not specify block and plot numbers, compensation was made to unknown title holders, payments were made to individuals other than those whose land had been valued, and payments were made without land titles and sale agreements. A sum of UGX.1.3 bn paid without resolving the inconsistencies was questionable. There is need to streamline the process of compensation of PAPs to ensure transparency and accountability in the process. 14 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

15 2.0 STATUTORY CORPORATIONS A summary of the key audit findings arising from audit of statutory agencies and state enterprises is highlighted below; 2.1 COMPENSATION OF PROJECT AFFECTED PERSONS (PAPs) The government is currently in the process of undertaking various projects which include: Transmission Lines (UETC), Distribution lines (UEDCL, REA, ERT) Power Dams (Karuma & Isimba) and the Refinery (Ministry of Energy), and these require compensation of land owners. Analysis of the current compensation arrangements revealed the following matters; 2.3 Delays in land acquisition There are frequent delays in acquisition of land for the projects and this was attributed to; Inadequate release of funds, delays between feasibility and actual compensation creating speculation and ultimately price hikes, diversion of Compensation funds, rejection of valuation rates approved by the Chief Government Valuer and land disputes amongst PAP claimants. As a result colossal amounts are still outstanding. For example Rural Electrification Agency:13.54bn, Mbarara Nkenda line 1.85bn and Karuma and Isimba projects:1.34bn. In the circumstances the progress of the projects was behind schedule and this impact on the timely attainment of the projects objectives. In addition there is a likelihood of resource overruns. 2.4 INVESTMENT IN INTEGRATED INTELLIGENT COMPUTER SYSTEM (IICS) PROJECT Government through UNCST has invested a sum of UGX.4.1bn since 2010/11 towards the design and implementation of an Integrated Intelligent of Computer System (IICS) to capture and update patients data in real time and provide a platform for facilitation data sharing among Health Centres and Hospitals. During inspection of Mulago National Referral Hospital, it was observed that there has been resistance by medical administrators to have this project take off. The objectives of placing, processing and management of orders for supplies internally were not evident. Stores management of pharmaceuticals and medical supplies to reduce over ordering and or identify expired drugs was not manifested. Currently, government has committed to fund this project and a sum of Shs.30bn is yet to be budgeted to rollout the system within the public sector from 2016/2017 after training over 67 Hospital and Health Centres. If government does not compel the Hospital administrators to use the system, the funds so far spent would have been wasted. an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 15

16 2.5 LACK OF STANDARDS AND GUIDELINES ON RADIATION MANAGEMENT The National Environment Act (1995) requires the National Environment Management Authority to establish criteria and procedures for the measurement of ionizing and other radiation; standards for the minimization of radiation; protective measures to be taken against radiation; the control of the effects of the radiation and safe practices to protect persons involved in activities prone to radiation exposure. The Authority is also required, in consultation with the Uganda Revenue Authority, to maintain a register of all radioactive substances imported into Uganda in such form and manner, and containing such information as may be prescribed. Contrary to the above, the radiation standards and guidelines have not been developed to help in the minimization of ionizing and other radiation in the environment. The register of all radioactive substances imported into the country is also not being maintained. Lack of standards and guidelines expose persons involved in radiation activities and the Country at large to risks like cancers and other health related diseases. I advised the Accounting Officer to expedite the consultations on establishment of Standards and guidelines, as this will guide national responses to risk associated with radiation. 2.6 PERFORMANCE OF RIFT VALLEY RAILWAYS UGANDA ON CONCESSION FEES According to the performance review conducted in 2014, it was noted that the sharing ratio of 60:40 between Kenya and Uganda as provided in the concession agreement was irregularly altered to 80:20 respectively which disadvantaged URC and led to a significant drop of revenue by 50%. In the year ending December 2014, Uganda should have earned UGX 5.6bn as concession fees but only earned UGX2.8bn. This poses a grave concern. I advised that RVR reverts to the original concession. 2.7 INADEQUTE MONITORING, FOLLOW UP AND RECOVERY OF LOANS WRITTEN OFF I noted weaknesses in monitoring, follow up and recovery of delinquent loans under the Microfinance Support Centre. The company wrote-off loan accounts to a tune of UGX billion and UGX billon in the years 2012/2013 and 2014/2015 respectively. This is a loss to government. There is urgent need to revisit the procedures and processes of lending out the government funds. 2.8 MANDATE OF THE UGANDA NATIONAL BUREAU OF STANDARDS Uganda National Bureau of standards (UNBS) is currently not able to effectively enforce its mandate of enforcement of 16 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

17 National Standards due to inadequate funding, lack of core staff and old fleet of field vehicles. As a consequence of inadequate funding; UNBS can only deploy limited staff in 18 out of 54 entry points in the country; of the required 400 national standards, only 150 can be developed; of the more than 3000 locally made products, only 500 can be certified during the year; only 800 market outlets can be inspected out of over 5,000; of an estimated 1,000,000 weighing scales and other measuring instruments, UNBS can only verify 500,000. Only 800 out of over 20,000 product samples can be tested for compliance in the UNBS laboratories. Only 50,000 imported consignments out of 100,000 can be inspected. There is a risk of counterfeit and substandard products entering the market and consumers not being able to obtain value due to them. I advised Government to improve funding of the Bureau to enable it execute its mandate. 3.0 LOCAL AUTHORITIES A summary of the key findings arising from the audit of Local Governments is highlighted below:- 3.1 LACK OF CONSOLIDATED LOCAL GOVERNMENTS ANNUAL ACCOUNTS Section 52 (1) (b) of the Public Finance Management Act, 2015, requires the Accountant General within three months after the end of the financial year to submit consolidated annual accounts of the Local Governments. However, contrary to the above provision, the Accountant General did not submit the consolidated annual account of the Local Governments for audit. Lack of a consolidated Local Government account denies the stakeholders financial information for comparative analysis and decision making. The Accountant General explained that it was not possible to consolidate the accounts due to limited time for developing the templates, guidelines and sensitization of the various Local Government staff that are necessary to implement the change required under the new legislation. I advised the Accountant General to initiate measures for the consolidation of Local Government account to comply with the law. 3.2 OVERPAYMENT OF SALARIES Section (B-a) (7) of the General rules on Payment of Salaries in Public Service Standing Orders,2010 requires salaries to be paid correctly, promptly and as a lump sum in accordance with the approved salary structure for the Public Service. an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 17

18 However, Payroll analysis carried out revealed that a sum of UGX.6,567,322,457 was paid in excess of the approved salary scales to various staff. The Accounting Officers attributed overpayments to challenges encountered during decentralization of salary payments on the Integrated Financial Management System (IFMS) and Integrated Personnel and Payroll System (IPPS) and outright errors during the salary payment process. Many of the Accounting Officers explained that they had initiated the process of recovering the overpaid amounts. I await for evidence to that effect. 3.3 PROCUREMENT ANOMALIES Local Governments procured items worth UGX.11,493,666,328 without following Public Procurement Regulations and Guidelines. The amount is comprised of UGX.310,619,509 which lacked procurement files, UGX.9,937,360,405 where there was breach of procurement procedures, UGX.1,029,688,268 involving inadequate contract management and UGX.215,998,1468 of unauthorized contract variations. As a result, I was unable to ascertain whether value for money was achieved. The shortcomings were attributed to lack of technical capacity, understaffing and deliberate flouting of PPDA regulations. There is need for the Accounting Officers in liaison with Public Procurement and Disposal of Assets Authority to develop capacity and engage the Ministry of Public Service to address the understaffing problem. In addition, Accounting Officers are encouraged to invoke the relevant sections of the Law for noncompliance. 3.4 FUNDS NOT ACCOUNTED FOR UGX. 5,524,074,947 was unaccounted for. Consequently, I could not confirm that the funds were utilized for the intended purposes. The delayed submission of accountability may also lead to falsification of documents resulting into loss of funds. This was caused by failure by Accounting Officers to enforce accountability controls and lack of advances ledger to monitor advances. There is need for Accounting Officers to enforce controls relating to financial management and accountability. 3.5 UNDER COLLECTION OF LOCAL REVENUE Regulation 32 of the Local Governments Financial and Accounting Regulations, 2007 requires Councils to ensure collection of all budgeted revenue in an approved manner. Review of revenue performance revealed significant under collection of Local revenue in 59 Councils amounting to UGX, 23,974,340,977. The shortfall in revenue collection was attributed to failure to carry out revenue enumeration and assessments, nonenforcement of contracts with private revenue collectors, understaffing and incomplete revenue records. There seems to be little effort in ensuring 18 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

19 effective collection of local revenue. I advised the Accounting Officers to sensitize tax payers on the relevant taxes and to develop strategies and enforce lawful measures to enhance revenue collections. 3.6 IRREGULAR LEVY OF DEVELOPMENT TAX There were instances of irregular imposition of development tax totalling UGX. 409,672,340 on contracts by some Local Governments in a bid to enhance local revenue collections without approval of the Minister for Local Government contrary to the regulations. There is a risk that such charges could compromise on quality of works and increased costs of service delivery. The Accounting Officers explained that this was an attempt by Councils to raise local revenue for service delivery. There is need for the Accounting Officers to seek for the appropriate authority prior to levying of the tax. 3.7 UNDER STAFFING The audit revealed high levels of vacant positions in Local Government has not significantly improved. The levels ranged from 14 % in Bududa District Local Government to 87% in Luuka Town Council. Understaffing overstretches the available staff beyond their capacity, creates jobrelated stress to the fewer staff and negatively affects the level of public service delivery to the community. This was attributed to limited wage bill and a ban on recruitment by the Ministry of Public Service. The Accounting Officers are advised to continue engaging the Ministry of Public Service, the Ministry of Local Government and the Ministry of Finance Planning and Economic Development to address the challenge. Meanwhile government is advised to address this phenomenon to ensure improvements in service delivery. 3.8 LACK OF LAND TITLES Out of 307 Local Governments, 118 entities representing 39% of the Local governments lacked land titles for the land where council properties are located. There is a risk that council land is exposed to encroachment and disputes which later leads to litigation in courts of law arising from land disputes between the Councils and Communities. The Accounting Officers attributed this to lack of funds to process land titles and absence of District Land Boards. There is urgent need for the Accounting Officers to prioritize and allocate funds and ensure that the land titles are secured. The District Councils are also advised to ensure that the District Land Boards are constituted. an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 19

20 3.9 LACK OF INFORMATION COMMUNICATION TECHNOLOGY POLICY (ICT) Local Governments are making considerable investments in the Information Technology equipment and related software without the necessary human resource and proper procedures to manage the IT resources. I have raised this issue continuously over the last three years. There is a risk of loss of equipment and data maintained therein. Although the regulations require the Accounting Officers to designate an Officer to manage the information and communication technology resources, the Accounting Officers are experiencing difficulties in identifying the Officers with the required competencies. It is recommended that the Ministry of Public Service should review the organization structure of local governments to include information technology personnel FINANCIAL STATEMENTS OF LOWER LOCAL GOVERMENTS In my previous year report, I noted that there was still a problem with presentation of financial statements in the Lower Local Governments. In the financial year under review, the shortcomings were still persistent. The anomalies include; Non-adherence to presentation and disclosure requirements as per Local Government Financial and accounting Manual 2007, for example, lack of cash flow statements, schedule of commitments, and others. Misstatement of account balances. Non- preparation of primary books of account such as Ledgers, cash books, and vote books. Lack of Board of survey reports Lack of Bank reconciliation statements and certificates of Bank balance. Unbalanced Budgets Lack of other statements, schedules and Notes to the accounts. Missing budget figures in income and expenditure accounts. Non-disclosure of losses. Preparation of financial statements is a stewardship role in which accountability for application of resources entrusted to Accounting Officers is reported to the stakeholders. Failure to present financial statements properly impairs interpretation and analysis of entity performances. This is attributed to understaffing, lack of training, Low levels of practical experience by clerks and non-adherence to the guidance provided in the Local Governments Financial and Accounting Manual 2007 and other accounting standards. Accounting Officers should liaise with responsible authorities to ensure the staffing gaps are addressed and the necessary training undertaken. 20 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

21 3.11 LACK OF STANDARD FINANCIAL REPORTING FRAMEWORK FOR SCHOOLS It was observed that there was no standard financial reporting framework for secondary schools. This was attributed to lack of financial and accounting manual. As a result, there was no uniform classification and coding of account balances, format and presentation of financial statements. Section 29 (2) (b) of Education (Board of Governors) regulations require the board to prepare within three months financial statements in the form approved by the Minister or district secretary for Education. There is need for the Minister or District Secretary for Education to prescribe the form of the financial statements for the Secondary Schools in consultation with the Accountant General UNUTILIZED CAPACITY BUILDING INFRUSTRUCTURE DEVELOPMENT FUNDS UNDER USMID PROJECT It was observed that 14 Municipal Councils under the Uganda Support to Municipal Infrastructure Development (USMID) project had not fully utilized funds released to them amounting to UGX.63,141,565,615 comprising of capacity building funds UGX.6,079,544,830 and infrastructure development funds UGX.57,062,020,785. Failure to utilize the released funds reflects lack of effective implementation of project programs disadvantaging the community who are intended to benefit from the program. Management attributed the low absorption of the capacity Building funds to the failure of the Municipal Councils to procure key retooling equipment for surveying, engineering and environment among others due to lack of technical capacity to procure such specialized equipment. In addition, the delay to utilise the infrastructure development funds was attributed to failure to attract responsive bidders for the jobs. There is need to enhance the absorption capacity to ensure full utilization of the funds released. 4.0 VALUE FOR MONEY AUDITS 4.1 THE REGULATION OF THE CONSTRUCTION SECTOR BY MINISTRY OF WORKS AND TRANSPORT Government has made efforts to streamline the construction sector through formulation of the National Construction policy and reform of the roads sector. In spite of these achievements, the audit identified areas of improvement to ensure proper oversight of the sector by the Ministry of Works and Transport. In spite of its mandate to formulate policy and provide oversight over the Construction Sector, the Ministry has continued to get involved in the implementation of various road construction projects in the country. This has negatively impacted on the effective an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 21

22 provision of oversight in the Sector. In addition, the Ministry has not yet enacted a law to regulate the construction industry. Delays were also noted in the review of the existing roads manuals, standards and guidelines. No support has been provided to the Regulatory and professional bodies to facilitate review of the statutes, professional ethics and codes of conduct and in such circumstances; the legal/regulatory framework in its current state is not robust enough to enable the Ministry to provide effective oversight in the Construction Industry. Whereas the Ministry budgets for the dissemination of the developed policies standards and guidelines, the funds received in this regard are not utilised for the purpose. The Ministry does not undertake research as envisaged in the policy statements because of diversion of funding earmarked for the purpose. This hinders the adoption of new and improved technologies in the construction sector. Minimal technical compliance monitoring was undertaken during the period under review. In addition, construction activities of major players in the industry like Uganda National Roads Authority, Kampala Capital City Authority and Ministry of Local Government were not being monitored. This hinders the quality of construction works. Additionally, lack of a follow-up mechanism renders monitoring ineffective. The Ministry has not put in place a coordination mechanism to harmonize the different stakeholder activities aimed at achieving of common goals in the Construction Sector. This results in duplication of activities and roles leading to resource wastage. 4.2 THE UTILISATION OF THE DISTRICT WATER AND SANITATION CONDITIONAL GRANTS BY DISTRICT LOCAL GOVERNMENTS The District Water and Sanitation Conditional Grant (DWSCG) has to a large extent supported the implementation of water and sanitation services and infrastructure in the rural areas. However, there is need to address the challenges noted during the study in order to ensure rational and sustainable utilisation of water resources for social and economic development of the country. There were notable delays by the districts in the procurement of service providers to implement planned activities. These delays were mainly a result of delays in approval of procurement methods, delays in approval of bidding documents, evaluation teams and evaluation of bids. The water was observed to be brown and had a foul smell in a number of boreholes which resulted in abandonment of the boreholes by the communities. This was caused by the poor quality of pipes that were used to sink the boreholes which are prone to rust. In other areas the water was reported to be high in mineral content especially iron content and therefore may not be fit for human consumption. 22 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

23 It was established that although designs for water facilities are developed and approved, they are never followed during construction of the facilities. This was very common in districts that constructed protected springs, and valley tanks. This in turn resulted into design flaws that may compromise the capacity of these facilities to serve the communities as planned. Although the Grant guidelines require every water facility to have a functional water user committee to manage the facility, most of the facilities visited did not have functional water user committees. This affects the management of the water sources and in the long run the sustainability of the grant. Although grant guidelines require that communities are required to contributed towards operation and maintenance of water sources the communities were hesitant to pay these fees. This is because people perceive that fees to be so high while others expect all costs to be met by government. This has negatively impacted on efforts to ensure sustainability of the grant. Grant funds totaling to UGX.733, 242,010 was used for activities which do not qualify as grant activities by some local governments. The funds were mostly used to settle court costs arising from court cases in which the local governments were involved. 4.3 THE REGULATION, MONITORING AND PROMOTION OF MINING SECTOR BY MINISTRY OF ENERGY AND MINERAL DEVELOPMENT Government of Uganda put in place the Mining Policy in 2001 and subsequently the enabling legislation in 2003 to guide the Directorate of Geological Surveys and Mines (DGSM) under the Ministry of Energy and Mineral Development (MEMD) in overseeing the mineral sector. The DGSM did not regulate the mining of sand, clay, murram and stone quarrying used for commercial purposes contrary to the Mining Act and as a result could not levy royalties on these activities. Failure to levy royalties on these commercialised building materials was due to DGSM s interpretation of the exclusion of building materials in the Mining Act without making an assessment as to whether they were mined by the individual for their respective domestic use or used for commercial purposes. Whereas the mineral policy provided for formalizing and regularizing mining operations of Artisan and Small scale Miners (ASM) activities, the MEMD did not implement and enforce it. It was established that artisan and small scale miners use rudimentary and labour intensive mining methods like heating up iron ore using firewood. Miners were found using mercury to recover fine gold from the crashed rock. Although Uganda signed the Minamata Convention on Mercury in 2013 to curb use of mercury in mining operations, Uganda had not an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 23

24 operationalised its provisions. As government embarks on the process of the review of the legal framework, it is important that the existing gaps in the regulatory and operational framework are addressed. The mines department of DGSM did not conduct adequate inspection and monitoring and thus could not track the performance of all the mineral licenses issued and enforce compliance of mining regulatory framework. Non-Tax Revenue (NTR) outstanding as at 30th September 2015 totaled to UGX 4.4 billion for the period July 2011 to September Although the Mining Act, 2003, provided for a penalty to be charged on unpaid royalties and the Commissioner was to prohibit any mineral right holders with unpaid royalties from disposing of minerals exploited from the sites for which they have a license, there was no evidence for enforcement of these provisions. The national mineral laboratory capacity in Entebbe only addresses a few tests and analyses as it is not yet accredited by ISO. Mining companies operating in Uganda were compelled to export samples abroad for complex mineral tests and analyses. There were no measures to track the results of tests conducted abroad. 4.4 THE REGULATION AND MONITORING OF ENVIRONMENTAL IMPACT ASSESSMENTS (EIAs) IN THE PETROLEUM SECTOR BY THE NATIONAL ENVIRONMENT MANAGEMENT AUTHORITY (NEMA) NEMA has made good strides in regulation and monitoring of EIAs in the Petroleum sector; specifically in the upstream resulting in improvements in the quality of EIAs and the compliance of upstream developers with reporting requirements. However, NEMA does not give timely feedback to developers on areas of improvement after monitoring. In the upstream, practitioners also face a challenge of not easily accessing baseline data and other information for use in the EIA process. In the downstream because of lack of coordination between NEMA and the Lead Agencies, some projects commence without EIA approval, while the approved projects are not regularly monitored as required. There are also delays by NEMA to complete review and approval of EIAs due to internal staffing challenges and failure by districts to budget and fund EIA review and monitoring activities. Quality being a critical issue in the EIA process, it is important that NEMA strengthens its oversight role to ensure improvement in the quality of work produced by the Environmental Practitioners. 24 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

25 4.5 MAINSTREAMING GENDER AND EQUITY IN THE FORMULATION AND IMPLEMENTATION OF THE NATIONAL BUDGET BY MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT (MoFPED) Whereas MOFPED built the capacity of a number of senior officers and middle level managers of Ministries, Departments and Agencies (MDAs) in gender and equity budgeting and sent out budget call circulars with gender and equity guidelines requiring all Government institutions to mainstream gender and equity, these officers did not apply the skills acquired to engender the budget formulation and implementation process and did not comply with the requirements of the budget call circular. None of the staff in all the 8 districts visited had received this training and thus could not effectively undertake gender and equity budgeting. MoFPED through Uganda Bureau of Statistics (UBOS) collects and disseminates gender disaggregated data but there was no evidence that the MDAs and LGs used gender disaggregated data obtained from UBOS in their plans. It was noted that Ministry of Education, Science, Technology and Sports (MoESTS) and Ministry of Health (MoH) had managed to collect, document and disseminate gender disaggregated data and information which facilitated planning, monitoring and evaluation of ongoing programmes. However the data collected by MoH was only disaggregated by sex and did not capture other special groups. Non disaggregation of data affects planning, and development of genderresponsive budgets. MoFPED did not carry out gender assessments annually in all the sixteen (16) sectors of the economy as required. Assessments were undertaken in only six (6) (Agriculture, Health, Education, Roads and Works, Water and Environment and Justice, Law and Order) sectors. Gender assessments are not undertaken at the LG level, denying them the opportunity to get feedback on implementation of gender and equity budgeting. Although MDAs had made policy/budget statements on addressing gender and equity, it was noted that resources had not been allocated to implement these statements. Gender and equity budgeting was arbitrarily undertaken in the LGs. It was noted that the reports of MoFPED on budget monitoring had not integrated gender and equity aspects. Whereas the MDAs & LGs were supposed to monitor the implementation of gender and equity issues in their activities, there was no evidence that this was done. MoFPED, MoGLSD and LGs have no systematic mechanism on how to coordinate activities of gender and equity budgeting. an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 25

26 4.6. THE EFFICIENCY OF THE OPERATIONS OF TECHNICAL AND VOCATIONAL INSTITUTIONS IN UGANDA The results of the efficiency study of the operations of Technical, Vocational and Education Training (TVET) Institutions in Uganda using the Data Envelopment Analysis (DEA) technique showed that the average inefficiency scores for the 40 TVET institutions decreased to 28%, 24% and 14% for financial years 2012/13, 2013/14 and 2014/15, respectively which showed a general improvement in efficiency over the three years under review. An average inefficient score of 28% means that the inefficient institutions in general had the potential to increase their outputs(that is pass rates and the number of graduates) by 28% while maintaining the same level of inputsthe results further indicated that the number of efficient institutions increased from 11 in 2013/14 to 19 in 2014/15.. It was noted that most Technical institutions are not generating revenues despite the huge potential to do so, many of the products made by the students (such as: chairs, pottery products, welded windows and doors) were found kept in stores rather than being sold to the public. In addition, various institutions were spending money on activities such as plumbing works, electrical repairs, motor vehicle repairs, repair of furniture and others which could be done by the instructors and students; total of UGX 399,897,980 was spent by 7 institutions on such services over the 3 years under review. Most TVET institutions still lacked the necessary equipment to provide practical skills and mainly relied on the 3 month industrial training and field visits at industries only to train students. Some institutes had workshop equipment not being utilised due to lack of: power, operational space operational manuals and training in use of the machines. It was also noted that tracer studies had not been undertaken to follow up on the graduates from the TVET institutions and the achievement of the desired TVET outcomes. Institutions stand to benefit more by tapping into the potential identified areas as, improved use of practical training to enhance the skills of trainees, and thus reduce student drop-outs, maximisation of revenue generated from training outputs, improved use of the institutions equipment and the use of tracer studies to determine the achievement of desired TVET outcomes. With improved efficiency, institutions stand to reap significant gains in their production and thus enhance their ability to impart relevant skills in order to raise productivity and incomes RENOVATION AND CONSTRUCTION OF SELECTED HEALTH FACILITIES UNDER THE UGANDA HEALTH SERVICES STRENGTHENING PROJECT Ministry of Health has undertaken specific interventions to increase the availability and functionality of health facilities by 26 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

27 renovation and construction of the nine health facilities at Entebbe, Iganga, Nakaseke, Mityana, Kiryandongo, Anaka, Nebbi, Moyo General Hospitals and Moroto Regional Referral Hospital. However, not all the user needs were ascertained and incorporated in the architectural and engineering design process resulting in various design changes and variation orders during the construction of the works. Inadequate planning and needs assessment resulted in design changes which necessitated contract variations leading to project delays throughout the contract implementation period. As a result, a sum of USD 1,234, was incurred as variations during project implementation as at 30th October 2015; underestimation of costs for the works at project appraisal led to a reduction in the scope of works as the project could not undertake the anticipated works in all the target sites of forty six (46) health facilities. It was further noted that the procurement process for works contracts commenced late which delayed the commencement of renovation and construction of works at the health facilities which resulted in nonutilization of donor committed funds that have attracted a non-utilization penalty of USD 256, Although works were still ongoing in 6 of the 9 health facilities, it was noted that their contract periods had elapsed. A review of the needs assessment reports revealed that for all the nine health facilities, there was need to increase staffing, staff housing, bed capacity and operational budgets, among other things if the health facilities were to be effectively maintained and cater for delivery of the required health services. 4.8 THE REGULATION OF ABSTRACTION AND DISCHARGE OF WATER BY MINISTRY OF WATER AND ENVIRONMENT The Ministry of Water and Environment has made positive efforts in ensuring that all abstraction of water and discharge of wastewater activities across the country are regulated through the issuance of permits and subsequent monitoring of permit holders. However, oversight of all stakeholders and players in the industry has been inadequate. Despite the enactment of the Water Act in 1998, there are still challenges arising in the regulation of the abstraction and discharge water and waste water to ensure optimal use of water resources; DWRM levies waste discharge fees based on only the water quality parameter of Biochemical Oxygen Demand (BOD) as a result, the fees charged do not take into consideration the other characteristics and components of the wastewater such as heavy metals, oil effluent and other chemicals which are toxic and equally expensive to treat. Thus, the fees charged do not deter pollution of the water resources by the permit holders. DWRM also takes longer than the timelines stipulated in the MoWE clients charter to assess applications and issue permits for abstraction and discharge of water which results in unauthorized abstraction/ an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 27

28 discharge of water.; Laboratories have not been designated by DWRM from where testing of samples for water quality by permit holders can be undertaken. It was also observed that the DWRM National Laboratory at Entebbe has not yet achieved international accreditation which impacts on international credibility of test results undertaken. Some permit holders do not adhere to the permit conditions such as installing facilities for measuring and recording of water levels and water abstraction volumes and submission of data on water abstracted; DWRM did not have documented monitoring manuals/ guidelines and a proper system for tracking and following up of monitoring activities.. The actions to be taken for non-compliance are not very stringent in the current legal framework so as to deter water pollution by permit holders. DWRM should undertake deliberate efforts in expediting the review of the legal framework, improve the water testing and monitoring activities in order to enhance its regulatory role and thus ensure that the risks to water pollution are mitigated IMPLEMENTATION OF THE PROMOTION OF RICE DEVELOPMENT PROJECT (PRiDE) UNDER MINISTRY OF AGRICULTURE, ANIMAL INDUSTRY AND FISHERIES (MAAIF) MAIIF has made significant progress in the implementation of the activities set out by PRiDe project. To a large extent, the PRiDe project is on course to achieving the project outputs. As the project comes to an end, it is important that the development of a proper rice information system be prioritized and all the players, including, the farmers are trained in the collection and management of rice data. This will facilitate access to rice data and also enable proper evaluation of project performance. In addition, the other critical activities, such as, testing of rice samples should be undertaken, as further delays may not allow corrective interventions to be undertaken in time during the life of the project UTILISATION OF EXTERNAL PUBLIC DEBT BY MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT (FOLLOW UP AUDIT) Whereas MoFPED indicated that it had undertaken measures to remedy the causes of low loan absorption as advised in the Auditor General s VfM report of FY 2009/10, the challenge of low absorption of external debt still persisted. The national debt portfolio was still underperforming with absorption levels below 50%. The measures devised by MOFPED to address the identified barriers to timely utilization of debt are yet to have a significant impact as some of the interventions undertaken by the Ministry were recently introduced while others lacked an effective follow-up mechanism to ensure their implementation. Low absorption of external debt and delay in loan effectiveness denies the intended beneficiaries anticipated benefits of the projects and economic benefits to 28 an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

29 the nation as a whole. Therefore, it is imperative that the proposed actions and interventions are followed up to ensure proper utilization of public debt UTILISATION CONSTRUCTION OF THE JINJA CENTRAL MARKET UNDER THE MARKET INFRASTRUCTURE COMPONENT OF MARKETS AND AGRICULTURAL TRADE IMPROVEMENT PROGRAMME (MATIP) - (FOLLOW UP AUDIT) In 2014, the Auditor General undertook a Value for money audit on the implementation of the market infrastructure component of the Markets and Agricultural Trade Improvement Programme (MATIP); the overall audit objective was to evaluate the implementation of the infrastructure development component of the Project. At the time of that audit, the progress of works for Jinja market was at 60% and technical audit could therefore not be comprehensively undertaken. Jinja Central Market is one of several markets being constructed under the project built to serve as a regional market for the districts of Buikwe, Mukono, Kayunga, Iganga, Kamuli, Buyende, Pallisa, Kibuku, Budaka and Mbale districts. Following the completion of the market and subsequent occupation by the vendors, there were public complaints about its construction in respect of drainage, improper electrical wiring and insulation, defects as cracks on the floor off the market. It was established that there was a delay in completion of works.. Verification of works undertaken revealed that some defects that were identified and captured in the snag list had not been rectified yet the defects liability period had expired. Additionally,test results obtained from destructive testing of a sample of cores showed results which were below the design concrete strength which needs investigation and monitoring. There were works being carried out by a private developer adjacent to the Jinja Central Market which have affected the operations of the market, the access road to the garbage skip of the market has been blocked and the garbage skip has been filled with scaffolding and building materials; as a result, the solid waste pipe, storm water line and clear water line for the market structure were damaged. This has affected the solid waste management in the market. This ongoing construction may weaken the substructure of the main market if safeguards are not enforced and adhered to It was however established that because the original design of Jinja Central Market was meant to accommodate four floors, due to funding constraints, only three floors were constructed. The available space in the market cannot accommodate all the 4,889 registered vendors implying the constructed market facility is still short of the planned requirements given the increasing demand for the facilities. It is important that the ministry addresses the existing capacity gap in the market and also ensure that the facilities are properly maintained to prevent faster deterioration. The outstanding quality defects also need to be followed up with the responsible parties. an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence 29

30 NOTES an effective contribution to improving public accountability and value for money spent Core Values: Intergrity, Objectivity and Professional Competence

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32 OFFICE OF THE AUDITOR GENERAL Audit House Plot 2C Apollo Kagwa Road, P. O. Box 7083 Kampala, Tel, Fax, Web: